Indian Harbor Ins. Co. v. Sarant Int'l Commodities, Inc.

INDIAN HARBOR INSURANCE COMPANY, as subrogee of B&G Foods, Inc., Plaintiff, v. SARANT INTERNATIONAL COMMODITIES, INC., CELSAN ITHALAT IHRACAT VE TICARET LIMITED SIRKETI,and SHANDONG RICHFIELD FOODSTUFFS INDUSTRY CO., LTD., Defendants.

CV 16-0025 (AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

January 15, 2021

MEMORANDUM AND ORDER

A. KATHLEEN TOMLINSON, Magistrate Judge:

I. PRELIMINARY STATEMENT

Plaintiff, Indian Harbor Insurance Company ("Indian Harbor" or "Plaintiff"), as subrogee of B&G Foods, Inc. ("B&G"), commenced this action against Defendants Sarant International Commodities, Inc. ("Sarant"), Celsan Ithalat Ihracat Ve Ticaret Limited Sirketi ("Celsan"), and Shandong Richfield Foodstuffs Industry Co., Ltd. ("Shandong") (collectively, "Defendants") alleging claims based on strict liability for product defect and negligence. See generally Amended Complaint ("Am. Compl.") [DE 16]. Plaintiff alleges that Defendants manufactured, distributed, and/or supplied spices to B&G which contained prohibited allergens, namely, peanuts and almonds. Id.

Presently before the Court is Plaintiff's motion for leave to file a second amended complaint, pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. See Plaintiff's Memorandum of Law in Support of Motion to Amend ("Pl.'s Mem.") [DE 48]; Plaintiff's Reply Memorandum of Law in Support of Motion to Amend ("Pl.'s Reply") [DE 50]. Specifically, Plaintiff seeks to add claims for breach of express and implied warranties against the Defendants, in addition to a claim for breach of contract solely against Defendant Sarant. Id. Defendant Sarant opposes the motion on the grounds that the amendments are futile. See Defendant's Memorandum in Opposition to Plaintiff's Motion to Amend ("Def.'s Opp'n") [DE 49].

For the reasons which follow, Plaintiff's motion for leave to file a second amended complaint is GRANTED. Plaintiff is directed to file its second amended complaint within 14 days of the entry of this Memorandum and Order.

II. RELEVANT BACKGROUND¹

B&G, a New Jersey corporation, manufactures, distributes, and sells food products. Am. Compl. ¶ 3. Defendant Sarant, a New York corporation, imports and distributes wholesale spices. Id. ¶¶ 4, 9. Defendants Celsan and Shandong are foreign corporations which manufacture, supply, distribute, and import wholesale spices. Id. ¶¶ 5-6, 24-25, 39-40. According to Plaintiff, at some undefined point in time, Defendants manufactured, supplied, imported, and/or distributed defective garlic power and ground cumin to B&G which contained prohibited allergens, namely, peanuts and almonds. Id. ¶¶ 1, 12, 27, 32, 40, 47. Plaintiff alleges that Defendants owed B&G a duty of care to provide spices free of allergens. Id. ¶¶ 11, 26, 34, 42, 49. As a result of Defendants actions, B&G incurred expenses in excess of $5,000,000 to recall packaged food products, which presumably incorporated the defective spices, from numerous retailers. Id. ¶¶ 1, 13, 28, 35, 43, 48, 50. Pursuant to an insurance policy B&G obtained with Indian Harbor, B&G was reimbursed for the losses sustained from the recall. Id.¶¶ 14, 29, 36, 44, 51. According to Indian Harbor, it is "subrogated ... to all of B&G's rights, remedies, and causes of action as a result of the loss, including those against the defendants." Id.

On January 4, 2016, Plaintiff commenced this action against Defendants Sarant and Vitesse Food Ingredients, Inc. ("Vitesse") asserting claims for strict liability for product defects and negligence arising from damages sustained from the defective spices sold to B&G. See Complaint ("Compl.") [DE 1]. On February 1, 2017, the original Complaint was dismissed against Defendant Vitesse by stipulation. See DE 11-12. The next day, Defendant Sarant filed a third-party complaint against Celsan and Shandong setting forth claims for negligence, contribution, and/or indemnification. See generally Third-Party Complaint ("Third-Party Compl.") [DE 13]. Plaintiff and Defendant Sarant stipulated to the filing of an Amended Complaint on March 1, 2017. See DE 17. Although not expressly addressed in the stipulation, the parties proposed an amended caption which recognized Celsan and Shandong as defendants, but not third-party defendants, which implicitly withdrew the third-party complaint filed by Defendant Sarant. Id. That same day, Plaintiff filed an Amended Complaint adding Celsan and Shandong as defendants and asserting claims for strict liability and negligence against the added defendants. See generally Am. Compl.

On April 14, 2017, Defendant Sarant filed an Answer with Cross-Claims against Defendants/Cross-Claimants Celsan and Shandong for contribution and/or indemnification. See Answer with Cross-Claims ("Answer") [DE 22]. To date, service of the Amended Complaint and Answer with Cross-Claims does not appear to have been effectuated on the Defendants/Cross-Claimants Celsan and Shandong.

The parties consented to the jurisdiction of a United States Magistrate Judge for all purposes on June 23, 2017. See DE 34. Judge Brown was the assigned Magistrate Judge at thattime. After the parties received several extensions of the deadlines to complete discovery and file dispositive motions, Judge Brown set the final deadline to complete discovery at July 1, 2018. See May 24, 2018 Electronic Order. At a status conference held on August 15, 2018, counsel reported that discovery was ongoing. See August 15, 2018 Electronic Order. The parties were directed to submit a status report by November 15, 2018. Id. On that date, the parties advised that discovery had been completed and they requested a settlement conference. See DE 40. Judge Brown held a settlement conference on July 3, 2019 which was then continued to October 7, 2019. See July 3, 2019 Electronic Order; October 7, 2019 Electronic Order.

When the parties were unable to settle the action during the October 7, 2019 continued conference, Judge Brown inquired whether any additional discovery was needed or if the parties were prepared to set a briefing schedule for dispositive motions. After a dispute arose among Plaintiff's counsel and Defendant Sarant's counsel as to whether the Amended Complaint sufficiently pleaded a breach of contract claim, Plaintiff's counsel requested leave to file a second amended complaint to include such a claim. Defendant Sarant's counsel thereafter informed Judge Brown that additional discovery may be needed if Plaintiff's anticipated motion to amend were granted. Judge Brown advised all counsel to be prepared to file a briefing schedule for any anticipated summary judgment motions shortly after the motion was resolved. A briefing schedule was then set in place for Plaintiff's motion for leave to file a second amended complaint. See July 3, 2019 Electronic Order.

The instant motion was filed on December 16, 2019. See Pl.'s Mem.; Def.'s Opp'n; Pl.'s Reply. Plaintiff attached a proposed second amended complaint ("SAC") to the motion which seeks to add claims for breach of express and implied warranties against the Defendants, inaddition to a claim for breach of contract solely against Defendant Sarant. See Proposed Second Amended Complaint ("SAC") [DE 48-3]. On January 17, 2020, the case was reassigned to this Court for all purposes.

III. LEGAL STANDARD

Rule 15(a) of the Federal Rules of Civil Procedure provides that in cases where a party cannot amend as a matter of course, "a party may amend its pleading only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2); see Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002); Branum v. Clark, 927 F.2d 698, 705 (2d Cir. 1991). Whether to grant leave to amend is a decision squarely within the district court's discretion. Krupski v. Costa Crociere S. p. A., 560 U.S. 538, 540 (2010) ("[Rule 15(a)] gives a district court discretion to decide whether to grant a motion to amend a pleading before trial."); see also Charter Commc'ns, Inc. v. Local Union No. 3, Int'l Bhd. of Elec. Workers, AFL-CIO, 338 F. Supp. 3d 242, 254 (S.D.N.Y. 2018) ("District courts 'have broad discretion in determining whether to grant leave to amend.'") (quoting Gurary v. Winehouse, 235 F.3d 792, 801 (2d Cir. 2000)). A court "should freely give leave [to amend] when justice so requires." Fed. R. Civ. P. 15(a)(2); Holmes v. Grubman, 568 F.3d 329, 334 (2d Cir. 2009) (quoting Fed. R. Civ. P. 15(a)(2)). "Amendments are generally favored because they tend to facilitate a proper decision on the merits." Rodriguez v. Ridge Pizza Inc., No. 16-CV-0254, 2018 WL 1335358, at *3-4 (E.D.N.Y. Mar. 15, 2018) (quoting MHANY Mgmt. v. Cty. of Nassau, 843 F. Supp. 2d 287, 340 (E.D.N.Y. 2012)); see also Johnson v. Landmark Hosp. LLC, No. 14-CV-6839, 2016 WL 843286, at *2 (E.D.N.Y. Mar. 1, 2016) (quoting Blaskiewicz v. Cty. of Suffolk, 29 F. Supp. 2d 134, 137-38 (E.D.N.Y. 1998)).

A court should deny leave to amend only if there is "undue delay, bad faith or dilatory motive on the part of the [moving party], repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the [nonmoving party,] ... [or] futility." Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962); see also Burch v. Pioneer Credit Recovery, Inc., 551 F.3d 122, 126 (2d Cir. 2008) (citing Foman, 371 U.S. at 182); McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200-201 (2d Cir. 2007). The party opposing the amendment bears the burden of demonstrating good reason to deny the motion. Speedfit, LLC v. Woodway USA, Inc., No. 13-CV-1276, 2015 WL 6143697, at *3 (E.D.N.Y. Oct. 19, 2015); see also Charter Commc'ns, Inc. v. Local Union No. 3, Int'l Bhd. of Elec. Workers, AFL-CIO, 338 F. Supp. 3d 242, 255-56 (S.D.N.Y. 2018) ("[Parties] opposing a motion to amend ... bear[ ] the burden of establishing that an amendment would be futile." ) (quoting Bonsey v. Kates, No. 13-CV-2708, 2013 WL 4494678, at *8 (S.D.N.Y. Aug. 21, 2013); Joinnides v. Floral...